The overriding objective of the capital structure decision should be to choose the level of debt that results in the largest possible share price.

Question

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The overriding objective of the capital structure decision is to choose the level of debt and equity that maximizes the value of the firm to its shareholders, which is reflected in the highest possible share price. This involves finding the optimal balance between debt and equity financing to minimize the cost of capital and maximize shareholder wealth.

The Overriding Objective of the Capital Structure Decision Should Be